The Nilekanis are reported to have purchased the stake in Fabindia through Entrust, their family office, for about Rs. 100 crore, pegging the valuation of the company at around Rs. 5,000 croreShambhavi Anand | ET Bureau | December 06, 2016, 10:04 IST

Two people familiar with the deal said the Nilekanis purchased the stake in Fabindia Overseas Pvt Ltd through Entrust, their family office, for about Rs 100 crore, pegging the valuation of the company at around Rs 5,000 crore.

“We are delighted to have Rohini and Nandan Nilekani as shareholders — they have believed in and supported our vision and mission of working with artisans and farmers on creating markets for the diversity and great beauty of India’s traditional industries,” a Fabindia spokesperson said without specifying the investment amount.

Earlier this year, PremjiInvest, the personal investment entity of Wipro Chairman Azim Premji and an existing investor in Fabindia, bought an 8% stake in the company from L Capital, the private equity arm of Louis Vuitton Moet Hennessy for about Rs 360 crore.

Premji now owns 25% in the company and the rest is owned by the Bissell family, which founded the company, the employees and other minority shareholders.

At present, Fabindia has 229 stores in India and 10 abroad. The company also runs an online portal for selling its products.

Fabindia, founded in 1960 by John Bissell to market India’s traditional crafts, started out as an exporter of home furnishing. The first retail store was opened in New Delhi’s Greater Kailash area 15 years later. In 2000, the company added a nontextile range to its portfolio. It also sells organic foods and personal care products. Fabindia has now forayed into western wear under the brand Fabels.

According to the latest results filed with the Registrar of Companies, Fabindia posted a 20.4% rise in sales at Rs 911.6 crore in the domestic market with profit before tax at Rs 72 crore during the year ended March 2016. The company, which has a significant presence outside India, hasn’t filed its consolidated financial report yet.

The ethnic wear segment, which is mostly fed by the unorganised market, is seeing aggressive expansion driven by newer players both online and in brick-and-mortar space. According to research firm Technopak, the size of the ethnic wear market is pegged at Rs 90,000 crore and it is growing at 15% year-on-year.

Nilekani has previously invested in startups such as research company Tracxn and eyecare chain Drishti. An email sent to him remained unanswered.

In 2011, Fabindia acquired majority stake in the UK-based women wear retailer EAST, popular for its vibrant and bohemian creations. Earlier this year, Fabindia sold some of its stake in the company to Rahul Kakar of Crore Capital for an undisclosed sum.